A lender will not lend unless it is convinced that the loan will be profitable. The consume’s credit score is the single most important measurement of their creditworthiness, calculated using a number of relevant factors so that it can serve as something of a shorthand for creditworthiness as a whole. As a result, people need to pay close attention to their credit score because it will have an enormous impact on their lives by influencing their access to a wide range of financial products. Here are 10 tips that you can use to build up your credit score:
1. Check Your Credit Score Report
People are entitled to a free copy of their credit score report on an annual basis. As a result, interested individuals should take advantage of this fact by ordering their credit score reports for their personal reading. After all, they can’t improve their credit score unless they know what the problem is.
2. Check for Errors
It is not unknown for credit score reports to include errors that have a negative impact on a person’s credit score. When this happens, interested individuals should dispute them so as to get them removed as soon as possible.
3. Make Your Payments On Time
Interested individuals should always make their payments on time. This is critical because a person’s payment history is the single most important factor used to calculate their credit score, meaning that it has a huge impact.
4. Pay Late Payments
Speaking of which, interested individuals should be paying off their late payments sooner rather than later. Granted, if they are late, the damage has already been done. However, people who pay them sooner rather than later can at least keep the damage from becoming worse, which is on top of avoiding the potential complications should outstanding balances get sold to a collections agency.
5. Send in Fewer Applications
Numerous applications for new credit in a short period of time tends to make lenders nervous because it suggests that someone is having money issues. As a result, interested individuals might want to send in fewer applications for new credit.
6. Make Less Use of Credit Cards
Credit utilization is one of the more important factors used to calculate a credit score. In short, it is the percentage of a person’s available credit that said individual is already using. Due to this, interested individuals might want to make their purchases using cash rather than their credit cards, which should help out in this regard.
7. Pay Down Outstanding Debt
Likewise, interested individuals will want to pay down their outstanding debt as well. This is important because a high credit utilization suggests to lenders that someone is already reaching the limits of what their finances will support, meaning that they won’t be particularly eager to lend more to them that could send them over the edge of financial disaster.
8. Keep Credit Cards Open
However, people shouldn’t close down their credit cards as soon as they have paid off the outstanding balances. This is because the length of their credit history is very important for their credit score, meaning that they will want to have those credit cards as well as their credit histories listed on their credit score reports. As for why length of credit history is so important, well, suffice to say that more information makes it easier to make an accurate assessment of the situation.
9. Speak with Creditors
Sometimes, people run into financial problems. When that happens, they should speak with their creditors to see if they have some kind of program that can help them by reducing their minimum payments for a time until they are back on their feet. Certainly, speaking with creditors can’t be worse than dragging things out until the payments are overdue. By which point, the impact will have been felt on the credit score.
10. Be Patient
Finally, interested individuals need to remember that credit scores don’t change all of a sudden but rather over the course of entire months and even years. As a result, if they are not seeing immediate results for their efforts, they shouldn’t give up but instead learn patience. This way or only this way will they be able to get the best credit scores, which in turn, should provide them with access to the best financial products at the best interest rates.